It
has been widely reported that the North of England presents the
best opportunity for buy-to-let investors to gain the best rental
returns. Like it or not, landlords have a decision to make; keep
their investments business focused and instead of buying with their
hearts, buy with their heads.
UK Rental Yields
A recent survey by the Paragon Group, a leading specialist
provider of buy-to-let mortgages for nearly two decades, released
statistics that clearly indicate the value of investing in the
North and in particular the North West of England.
The survey found that landlords with properties in the North West
currently receive the highest in rental yields above all other
areas of the UK. In the North West they reported that the average
rental yield was 6.6% in the first quarter of 2012, up 5.9% from
the last quarter of 2011.
The North East of England also
reported high rental yields coming in second to it's neighbours' in
the west, with landlords seeing average rental yields of 6.5% in
the first quarter of 2012.
Investment Decisions
Of course it's not all about the North; across the UK there are
plenty of opportunities to find a property that gains excellent
year on year rental returns. It's really good news for buy-to-let
investors at the moment; according to Paragon, the average rental
yield in the UK is sitting at 6.2%, up from 5.9% in the last
quarter of 2011.
Paragon's survey found seven regions where rental income was above
or equaled the UK average of 5.9% from the end of 2011 - North
West: 6.6%, North East: 6.5%, South West: 6.4%, East of England:
6.3%, South East (excl. London): 6.1%, Wales: 6.0% and Central
London: 5.9%
It is important to remember that the statistics measured by
Paragon relate to the income generated from renting properties,
only. The other aspect to consider seriously when investing in
buy-to-let property is that of rising or falling house prices and
the affects on overall returns, positively or negatively.
The Halifax House Price Index tracks the changes in house sale
prices. Buy-to-let investors need to consider how price trends may
affect their investments related to the area they choose to buy in.
Latest price index March 2011 to March 2012 - East Anglia: 7.6%,
Greater London: 3.6%, East Midlands: 2.0%, Yorkshire and the
Humber: 1.7%, South West: 1.4%, North: 0.4%, West Midlands: 0.2%,
South East: 0.1%, North West: -0.5%, UK: -0.6%, Wales: -2.9%,
Scotland: -10.1% and Northern Ireland: -11.7%
Overall the aim of a buy-to-let investor is to gain high rental
yields with steady or increasing property prices.
Source - Paragon and Halifax HPI
